The SPDR Gold Trust (GLD) stock has become a shining star in a dark world as stocks and bond yields plummet. The ETF jumped to a high of $180, the highest level since February as gold prices soared. It has risen by almost 6% from its lowest point on February 24.
Gold as a safe haven
The SPDR Gold Trust is the biggest gold-focused ETF globally, with over $56 billion in assets. It tracks gold performance, making it an easier way of investing in the precious metal. In the past few days, demand for gold has been elevated as investors move to its safety.
The most recent cause for inflows was the rising jitters in the banking sector. Most bank stocks dropped by more than 5%, with Credit Suisse shares falling by over 30%. This happened after the company’s moneyed shareholder, Saudi National Bank, ruled out further financial support.
The situation came a few days after Silicon Valley Bank (SVB) and Signature Bank collapsed. In the US, officials provided a backstop for all depositors. The impact of these collapses is that regional banks will need to contend with tighter regulations, including more capital requirements.
In Switzerland, there are limited chances that authorities will allow Credit Suisse to become bankrupt because of the role that banking plays in the economy. As such, the Swiss National Bank will likely support a takeover, probably by UBS or a consortium of Swiss banks. In a statement, the SNB said that it will provide the bank with liquidity if needed.
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The next key catalyst will be the upcoming actions by the Federal Reserve. Economists believe that the Fed will likely hike rates by 0.25% as it commits to fighting against inflation. The 25 basis point hike will be a compromise considering that Jerome Powell hinted that the bank will hike by 0.50%.
GLD ETF stock price forecast
The daily chart shows that the GLD ETF stock has been in a strong bullish trend in the past few days. A closer look shows that the fund has formed a cup and handle pattern that is shown in green. Most importantly, the 25-day and 50-day exponential moving averages (EMA) formed a bullish crossover pattern.
The MACD and signal lines have moved above the neutral level. The same is true with the histogram of the indicator. Therefore, there SPDR Gold ETF will likely continue rising as buyers target the key resistance point at $200.
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